SYDNEY (Reuters) - Rio Tinto (RIO.AX)(RIO.L) locked in $4.4 billion (2.9 billion pounds) in financing on Tuesday to fund a massive expansion of a copper mine in Mongolia and a final decision whether to proceed with construction will be made in the first half of 2016.

The underground expansion of the Oyu Tolgoi mine is one of three big growth projects for Rio Tinto, on even as the sector cuts spending to weather a downturn in commodities prices.

"This agreement has been more than four years in the making and it is one of the most significant agreements of its type in the metals and mining industry," Rio Tinto copper chief Jean-Sebastien Jacques told reporters on a call.

Rio Tinto and other big mining houses such as BHP Billiton (BHP.AX) (BLT.L) and MMG Ltd are amassing vast copper holdings in a push to capture a greater chunk of the $140 billion world market in an attempt to be ready for a turnaround in the metal's fortunes that most believe is years away.

Separately and in joint ventures, the companies intend to mine millions of additional tonnes of copper over the coming decade.

Jacques said Australian, Canadian and U.S. export agencies joined 15 international financial institutions in making up the financing for the Oyu Tolgoi expansion.

Open pit mining of Oyu Tolgoi, in the south Gobi desert, began more than two years ago, but work on the underground mine was stalled amid disputes over taxes and construction costs, which were resolved earlier this year.

The expansion will dig more than 200 km (125 miles) of tunnels to access 25 billion pounds of copper and 12 million ounces of gold reserves, making Oyu Tolgoi the world's third largest copper and gold mine.

Rio Tinto is operator of the mine, which is 66 percent owned by Rio's Turquoise Hill (TRQ.TO) arm and 34 percent owned by the Mongolian government.

Initial production from the underground part of the mine is still five to seven years away, long enough, Jacques said, for the copper market to turn from surplus to deficit.

Copper is trading near its lowest in six years, weighed down by a global supply glut.

"As and when the Oyu Tolgoi underground is running, we expect the market to be in a structural deficit," Jacques said.

"From our perspective Oyu Tolgoi will be part of the solution to provide the copper that is required in China or any part of the world at that point in time," he said.